Wednesday, Feb 24, 2010
The recovery in British house prices is built on sand
The Economist: Shaky foundations
"In short, British house prices are still far too high."
'nuff said.
Posted by voiceofreason @ 06:17 PM (854 views) Add Comment
11 Comments
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1. alan_540 said...
Good article, so the question is how long before we return to 3x lending and if you really want to buy at the bottom of the market how long before 2.1x prices start to appear? Some time over the next 10 years maybe.
2. dbc reed said...
We know all this.Its a rehash of HPC commentary.Whats to be done? That's the question.
3. alan_540 said...
Revolution!
4. alan_540 said...
Patience is OUR only option, as to what should be done by policymakers, increasing supply and regulating lending downwards would solve the problem. Will that happen quickly ... I doubt it - Labour aint gonna change anything if they win and the Tories won't either (if they did they'd be voted straight out on 5yrs time - which, to give Gordon his due, might be the plan of course).
5. alan_540 said...
Oh yes, also giving renters back there assured tenancy rights would deter BTL make renting more attractive and thereby drive down demand, I think the Thatcher did away with these (or watered them right down) originally.
6. str 2007 said...
alan
The short hold tenancy was created to enable lenders to lend to landlords.
Lenders don't want to lend if they can't get tenants out.
7. alan_540 said...
Thereby detering BTL which was my point.
8. luckyjim said...
This article has been on here before. It makes some interesting points about supply and demand but ultimately falls back on the flimsy argument that there is a long term average for house prices and that somehow we will return to this average. Why ? And how ?
We spend far more on houses (as a proportion of income) than we used to. We also spend more on holidays and (surprisingly) less on cars. Our proportional spend on food is half what it used to be. Is something going to happen to change all this back to how it was ? Are food prices going to double ? Are we going to start eating twice as much ?
The ‘long term average’ argument also assumes that government policy has no effect. Council house building at less than 1% of the pre-Thatcher level has no effect. Immigration has no effect. A Land Value Tax would have no effect.
On the plus side, if this theory is correct, I am quite looking forward to footballers' wages (and the price of a season ticket) returning to their ‘long term average’.
9. Davethebox said...
luckyjim @8 said
"This article has been on here before. It makes some interesting points about supply and demand but ultimately falls back on the flimsy argument that there is a long term average for house prices and that somehow we will return to this average. Why ? And how ?"
Why? - because affordability is still an issue for FTBs
How? - when interest rates rise, people can't afford to stay in their houses and mass repossesions take place
Prices will have to come down.
10. alan_540 said...
@8 Luckjim.... What complete and utter tosh!
11. shipbuilder said...
LJ - yes, of course those are all permanent trends, and nothing to do with the greatest credit bubble ever seen.